Canadian regulators have released a new guide for cryptocurrency exchanges

The Canadian Securities Administrators (CSA) have issued new guidance that manyThe country's cryptocurrency exchanges will be subject to national securities laws.

The new guidance published by CSA is in partcontinues to develop regulatory ideas proposed in March 2019. At the time, Canadian regulators stated that “if crypto assets representing securities or derivatives are traded on a platform, then such platform will be subject to securities legislation.”

In a new notice, Securities AdministratorsCanada said that such laws “can also apply to platforms that facilitate the purchase and sale of crypto assets, including crypto assets, which are goods, because the contractual right of a user to a crypto asset can itself be a derivative.”

Moreover, according to the manual, exchanges thatthey control the funds of clients and are also subject to these laws, even if they do not exchange assets that may be regarded as securities or derivatives. Exchanges involved in storage, that is, trading platforms that do not process and do not control customer funds, are most likely not to be subject to the new rules.

“Some platform operators believe that theirThe sites are not subject to securities legislation, since they only allow transactions with crypto assets that are not considered derivatives or securities. However, based on our analysis of how trading on platforms occurs, we note that some sites simply provide their users with the contractual right to the main crypto asset, and do not immediately deliver it to users. In such cases, after considering all the facts and circumstances, we came to the conclusion that these platforms are subject to the securities laws, ”regulators said.

Cornell Professor of LawRobert Hockett University noted that when a digital asset is not delivered immediately and stored on the exchange, there is a risk that it will lose its value and this will result in losses for customers. Thus, if exchanges actually offer “the right to own something in the future,” this could expose investors to risk and speculation.

Lawyer Christine Duhaime,specializing in cryptocurrency industry issues, described this step by regulators as "a confident move towards protecting consumer rights." She said:

“I think regulators understand how they workexchanges and wallets. They want to force all exchanges that accept customer assets for storage for any period of time to operate in accordance with securities laws, thereby eliminating the risks for users in Canada. ”

Canadian regulators are paying more attentionon the cryptocurrency industry. In November, the British Columbia Securities Commission (BCSC) took control of cryptocurrency exchange Einstein, which announced it would cease operations. The problem of lack of regulation of cryptocurrency exchanges was aggravated by the closure of the Canadian exchange QuadrigaCX, whose clients lost more than $190 million.

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